Smallholder commercialization and climate change: a simulation game for teff in South Wollo, Ethiopia

Abstract

Replicable Business Models (RBMs) focus on reducing economic coordination, opportunism, and price risks but pay less attention to risks from natural shocks. A simulation game was designed to capture the impact of variable rainfall on teff production and commercialization in South Wollo Zone, Amhara region, Ethiopia. The game captured farmers’ decision-making for three rainfall scenarios and three levels of market prices. The results showed that variable rainfall had little impact on the levels of teff production or commercialization. The exception was the scenario where rainfall failed in both crop seasons; however, the probability of this scenario was low. If rains failed in the first wet season (Belg) or if rains in the second and main wet season (Meher) were late, farmers maintained teff production by increasing the area planted and the share of teff that received inorganic fertilizer. Resource constraints – particularly shortage of land – limited farmers’ production of teff. Despite these constraints, the simulation revealed that farmers will increase teff sales in response to higher prices. The risk simulation game provides a diagnostic tool to evaluate the performance of the RBM and the potential for smallholder commercialization in the face of natural shocks.